Australian miners moving the dial for decarbonisation

MELODIE MICHEL, REPORTER, Energy and Mines

Now that renewable energy is decidedly cheaper than fossil fuels tfor generating electricity in remote conditions, Australian miners are eyeing 100% clean base load generation and the electrification of fleets.

Australia is blessed when it comes to renewables: according to Geoscience Australia, the country receives no less than 10,000 times its total energy consumption in solar radiation every year. It also enjoys strong wind resources, with current installed capacity covering about 10% of its energy needs, and many new projects in the pipeline. With this in mind, it is no wonder that renewable energy has become the cheapest form of power generation in Australia.

Gold Fields, which recently had to increase power capacity at the Gruyere Mine for expansion plans, knows this first hand. “We are planning an almost 30% increase in throughput, and we need to support that with additional power. Our options were either to commit to additional gas pipeline capacity or to add solar. The solar option proved to be the lower-cost option, so what we can say is that it is cheaper on remote mine sites to invest in renewables. We’ve proven that now,” says James Koerting, Manager, Energy, Australasia at Gold Fields.

The expansion is currently underway, and will involve the addition of a 4 MW gas engine, a 13 MW solar farm and a 4.4 MW battery storage system, resulting in about 10% renewable penetration in the overall power plant.

This is notably less ambitious than Gold Fields’ Agnew project, for instance, which is sourcing 54% of its energy needs on average from renewable sources. Koerting explains that this is due to existing contract structures that limited the project’s flexibility. “Agnew was a greenfield project whereas Gruyere was an addition to an existing power station. Because we have existing assets that we’ve invested in, we need to get a return on those; we can’t just commit to different renewables without driving up the costs generally,” he notes, adding that there may be opportunities to increase the renewable capacity at Gruyere in the future.

Meanwhile, the company is looking at increasing the renewable penetration at Agnew by storing curtailed energy, and potentially adding more solar capacity. “Energy storage is still quite expensive but I’m doing some modelling at the moment just to understand the applications, where it’s going to work for us,” Koerting says. Lithium and other chemistry batteries, flow batteries, gravity storage systems and thermal storage are all being considered, but the company doesn’t have a timeline in mind for their installation.

That’s not the case at GMA Garnet’s Port Gregory Mine, also in Western Australia: there, the company is hoping to reach 100% renewable generation (up from 70% currently) within the next five years. “The biggest production source of our product globally is from Port Gregory so this is our opportunity to really move the dial and achieve our decarbonisation target,” says Grant Cox, GMA Garnet’s Acting CEO and Chief Financial Officer.

Port Gregory has been operating with renewables since last year, with a hybrid plant developed by Advanced Energy Resources (AER) comprising of a 2.5 MW wind farm, a 1.1 MW solar farm and a 2 MW battery. Cox explains that the plant has been performing better than expected, and although the details of the expansion are still confidential, it will involve increasing the wind, solar and storage capacity to reach 100% renewable power. “I understand it would be a world first,” he notes.

The reasons for this ambition on the part of Australian miners are multiple. Aside from the drop in renewable and battery technology prices, there is a sense in the community that decarbonisation is no longer an option. “Particularly in base metals and battery minerals, mining companies globally are competing on the basis of whether those minerals are zero carbon or not. They expect a premium or better access to market based on those minerals being clean, and this is shaping how they think about their energy supply and electrification,” says Graeme Stanway, Founder and Chairman of State of Play. He adds that while ESG pressure from investors is a factor, even more pressure is coming from the market. “It’s going to be seen as a prerequisite,” he warns.

BHP was the first Australian miner to announce carbon targets in 2019, and it was shortly followed by Rio Tinto and Fortescue Metals Group (FMG). All three of them are listed companies that probably felt the pressure from environmentally conscious investors sooner than others. But these announcements had a ripple effect in the market, and now even private companies are ready to publicly set targets. “It’s starting to drive innovation and faster and faster uptake of renewables. These announcements are definitely having an effect. It’s not an easy transition but everybody is grasping the issue now,” notes Rob Wilson, Head of Western Australia at the Clean Energy Finance Corporation (CEFC).

Both Gold Fields and GMA Garnet are currently working on their targets, hoping to announce them in the coming months. Cox explains that while GMA Garnet’s two shareholders have a keen interest in building a sustainable business, the bigger driver is customer expectations. “Part of our value proposition is that our product is a more environmentally sound alternative than coal and copper slags which are the main competitors in markets. The large part of our proposition is that you can recycle our product, so the work we’re doing on reducing carbon emissions helps add to that story in the value proposition,” he adds.

At Gold Fields, Koerting explains that the setting of a public target would increase the company’s focus on decarbonisation. “At the moment all of the evaluations are done on a commercial basis but that might change for a company-mandated emission reduction target, and if that becomes the case, it might be a stronger focus,” he explains.

However, he notes that it may be more difficult for gold miners to set targets, because their mine lives tend to be shorter or less predictable than in iron ore. “We’ve got to start looking at what investments we can make that will not carry as much risk should the mine close early, and some of these are around redeployable solar and energy storage: we can make mine life asset purchases, and if the mine life doesn’t continue on then we’ll relocate,” he says.

Mine life is a known challenge when it comes to installing renewables, but miners and developers are using more and more innovative solutions to overcome it. At CEFC, Wilson believes renewable energy investments start making sense around a mine life of 10 years, but it is still possible to decarbonise shorter-term projects. “We’re keen to get shorter-life mines using renewables as well, so we’re looking at redeployable options: redeployability is achievable at the smaller scale, and that’s starting to get real traction in the solar sector,” he says.

But even wind technology can be made more affordable with a little creative thinking: the Port Gregory project, for instance, makes use of second-hand wind turbines imported from Europe — keeping costs down and reducing the project’s environmental impact even further.

With increasingly ambitious targets and innovative solutions, projects aiming for 50% renewable energy and up are becoming the norm. In fact, most of the projects CEFC is currently looking at are around 70% to 90% renewable penetration. “We see our role as trying to drive new standards and trying to get the renewable energy penetration up, it’s going to become the new norm pretty quickly. Then, when we engage with a party, we try to get them to embrace an ethos around low carbon by aiming for full carbon neutrality, however long it may take,” Wilson explains.

While they work on increasing the renewable percentage in their power plants, Australian miners have also started to explore the decarbonisation of mobile fleets — namely through electrification. Since its launch earlier this year, the Electric Mine Consortium has received strong interest: the 14 initial members — State of Play, Sandvik, Epiroc, OZ Minerals, South32, Gold Fields, Safescape, Dassault Systemes, Energy Vault, Hahn, Horizon Power, 3ME, IGO and Barminco — were joined recently by two more miners: Evolution Mining and Blackstone Minerals.

Stanway explains that the consortium’s focus is mainly on underground mobility, with storage, large equipment, light vehicles, electrical infrastructure and charging and mine design seen as key elements.

Underground electric mobile equipment is already in place in various Canadian mines, but none has been commercially deployed in Australia, though various pilot projects are underway. This is mostly due to the fact that mining conditions tend to be different, with steeper gradients in Australia than in Canada, requiring more power from the battery.

“We expect this can take at least another four or five years to become an off-the-shelf item,” says Gold Fields’ Koerting. “What we’re doing at the moment is understanding the change it’s going to bring to our operations, and working together to influence and leverage the way the consortium work with OEMs and manufacturers of mining equipment to commercialise their technology.”

The good news is, switching to electric equipment is expected to result in a decrease in the mine’s power requirements due to reduced ventilation needs underground. “This means that our power generation at the mine doesn’t need to be upgraded, it’s just a matter of balancing energy flows in the mine,” adds Koerting.

But for many in the electrification space, the real disruption will come when miners stop wanting to convert existing equipment to electric, and instead adopt smaller, autonomous vehicles. “When you start to see things get smaller and automated, rather than bigger, that will be a big milestone, a turning point,” expects Stanway.

Australia’s abundant renewable resources and the continuous decrease in renewable technology prices have unlocked the next stage of the mining sector’s decarbonisation and empowered companies large and small to start cleaning up their power supplies — the exhaustive list of recent projects included in this article is proof of that. In the next five years, advances in energy storage technology and the ongoing development of electrified mobile equipment are set to propel the industry even further towards carbon neutrality.